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Press releases 2013 -

OFT refers soft drinks merger to Competition Commission

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14-13    13 February 2013

The OFT today referred the proposed acquisition by A.G. BARR plc (Barr) of Britvic plc (Britvic) to the Competition Commission for further investigation due to concerns that it could reduce competition between certain brands of these two soft drinks suppliers.

Barr and Britvic are two of the three main players in the UK that offer a wide range of soft drink brands. The other is Coca-Cola Enterprises.

Barr and Britvic supply a range of carbonated and non-carbonated soft drink brands: Barr's brands include Orangina, KA and Rubicon as well as IRN BRU, which has a particularly strong presence in Scotland. Britvic's brands include Robinsons, Fruit Shoot, Tango and Pepsi.

The OFT's investigation found that the acquisition raised competition concerns with respect to the loss of the competitive constraint from some of Britvic's brands on Barr's IRN BRU and Orangina brands.

Consumer survey evidence submitted by the merging parties showed that Coca-Cola and other brands supplied by Coca-Cola Enterprises were important alternative choices for many drinkers of Barr's IRN BRU and Orangina brands. However, it also showed that some of Britvic's brands - in particular Pepsi and Tango - were also sufficiently close alternatives to raise competition concerns. As a result, the OFT could not rule out the possibility of higher prices post-merger.

Amelia Fletcher, OFT Chief Economist and Decision Maker in this case, said:

'The soft drinks industry is an important one for many consumers in Great Britain. People spend over £9 billion each year on these drinks.

'This merger will see the UK market reduce from three to two main players. Our investigation has identified competition concerns relating to this deal with respect to Barr's IRN BRU and Orangina brands which could lead to higher prices for consumers.

'In addition, we could not rule out the possibility of further competition concerns arising from combining the overall Britvic portfolio of soft drinks with the entire Barr portfolio. We are therefore referring the merger to the Competition Commission for an in-depth investigation.'

NOTES

  1. Barr's brands include IRN BRU, Tizer, D'N'B, KA, the Barr range, Barr's Originals, Strathmore Spring Water, St Clements juice drinks, Simply juice drinks, Sun Exotic and Rubicon exotic juice drinks. Barr manufactures and sells Orangina in the UK under licence from Orangina Schweppes. Further, Barr has a partnership with Rockstar Inc, under which it sells and distributes the Rockstar energy drink brand in the UK and Republic of Ireland. Britvic brands include Robinsons, J2O, R Whites, Fruit Shoot, Britvic, Purdey's, Pennine Spring, Tango, Juicy drench and drench. Britvic has an exclusive bottling agreement with PepsiCo in the UK for Pepsi, 7UP, Gatorade, Mountain Dew and SoBe V Water, as well as an exclusive arrangement with Pepsi Lipton International Limited for Lipton Ice Tea.
  2. The Reference Test - The OFT has a duty to make a reference to the Competition Commission if the OFT believes that it is or may be the case that a relevant merger situation has been or will be created, and as applicable, the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
  3. Under the Enterprise Act 2002 a relevant merger situation is or will be created if two or more enterprises have ceased or will cease to be distinct enterprises, and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.
  4. The current date by which the Competition Commission is expected to report is 30 July 2013. The Competition Commission may extend the 24-week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
  5. The text of this decision will be placed in the mergers section as soon as is reasonably practicable.



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